Higher demand and a short supply of hotel rooms are supposedly driving the difference in room rates. But the Olympic committee may also have a system in place to make sure that consumers' rights are better protected.
Hotel rooms are expected to cost almost 50 percent more in Rio de Janeiro during the upcoming World Cup soccer tournament than when the city will host the 2016 Olympics, in part because organizer FIFA’s official accommodations agency hasn’t set maximum room rates like those promised in Rio’s winning bid for the Olympic Games.
FIFA is working with the Swiss company MATCH Services as the official accommodations agency for the World Cup. MATCH signed contracts with the vast majority of hotels in Rio and other cities that will host matches, and offers rooms via FIFA’s website at high rates that have prompted an ongoing investigation by the Brazilian government into possible cartel-like practices.
Industry studies, documents from Rio’s Olympic organizing committee and an Associated Press review of hotel prices offered by MATCH all show the discrepancy between housing costs for the two big sporting events.
The cost difference between the two big events is in large part a result of the local Olympic organizing committee capping hotel prices. But analysts say it’s also the simple economics of supply and demand: More fans are expected during the World Cup than the Olympics, and more hotel rooms will be available during the 2016 games because of ongoing construction of facilities.
“It’s normal that having the FIFA agency involved in the negotiations affects the prices,” said Alfredo Lopes, president of the association’s Rio de Janeiro bureau. “MATCH negotiated all the prices with almost 90 percent of the hotels in Rio. Now it’s just reselling the packages.”
Other analysts said the price difference also reflected local fervor for the World Cup.
“What may play a role in the difference in prices is the magnitude of having the World Cup in a country like Brazil, where football is everything,” said Gabriela Otto, a hotel industry consultant. “That may attract a lot more people compared to the Olympics, and prices are always linked to supply and demand.”
Also playing a role is the expectation that Rio will have nearly 10,000 more hotel rooms in 2016, according to the Brazilian Hotel Industry Association.
“The industry already knows that in 2016 there will be a lot more rooms available in Rio, so the prices likely will have to be adjusted for that,” said Flavia Matos, an executive director with the Brazilian Forum of Hotel Operators.
The average cost for a hotel room in Rio during the football tournament is expected to run about $460, according to the Brazilian government’s tourism agency and an AP analysis of prices, while during the Olympics the average maximum rate is estimated at about $310, according to Rio’s Olympic bid document used to win the Games.
In August, Brazil’s tourism agency Embratur asked FIFA and hotel operators to negotiate lower prices for the World Cup. The request came after one study showed that some room rates would run up to 500 percent higher in some hotels offered by MATCH.
Then in October, the Brazilian government said it would investigate whether MATCH was involved in “cartel” practices leading to hotel price hikes.
As yet, the government’s tourism agency has taken no action even though the World Cup is less than six months away and many hotels are already sold out.
“The federal government is watchful of the prices charged by hotels during the World Cup and will mobilize all available means to prevent any abuse,” the Sports Ministry said in a statement.
MATCH, which is also FIFA’s agency for selling tickets to the World Cup matches, has repeatedly denied any wrongdoing and said it could not explain the difference in expected hotel costs between the World Cup and Olympics.
“We are not in a position to comment with respect to hotel accommodation for the Olympic Games as we do not know at all what kind of arrangements may have been made or what conditions may have been imposed,” MATCH said in a statement.
The company said it’s primarily responsible for contracting and delivering accommodation for the FIFA community, including its officials, delegates, guests and staff. It also sells rooms to FIFA’s commercial affiliates, the media and hospitality customers. Rooms are offered to the general public through the FIFA website operated and maintained by MATCH.
FIFA and MATCH this month were each fined more than $200,000 by consumer rights officials because of alleged ticket irregularities at a Confederations Cup venue, and prosecutors still want the entities to pay nearly $2 million in damages for allegedly not providing the seats that fans paid for during the warm-up tournament this year.
Copyright (2013) Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Photo Credit: Men are silhouetted against Copacabana beach in Rio de Janeiro, Brazil, Thursday, Dec. 26, 2013. Silvia Izquierdo / Associated Press